Prince George’s County tops in state for 2006 foreclosures

Prince George’s County led the state in foreclosures in 2006, and has continued that pattern for the first quarter of 2007.


A total of 1,558 foreclosures were recorded in the county last year, with 590 in the first three months of this year, up 56 percent from the same period in 2006.

But Prince George’s dubious distinction is nothing new, and was the case even before the subprime market plunged, said Darrell Carrington, a senior loan officer with Freestate Mortgage Services in Bowie.

In fact, troubles in the subprime mortgage market have not hit Maryland as hard as other states.

Of the nearly 129,000 subprime home loans serviced in Maryland in 2006, about 2 percent, or 2,580, were in foreclosure by the end of the fourth quarter, up from 1.3 percent, or 1,677, in the first quarter of last year, according to Mortgage Bankers Association 2006 National Delinquency Survey.

That’s still significantly lower than the national average of 5 percent.

Subprime loan delinquencies in Maryland also rose significantly in 2006, from almost 8 percent in the first quarter to 12 percent in the fourth quarter. The mortgage association could not provide county data.

Carrington said high home prices in Prince George’s, in relation to other nearby counties, is a factor in its high foreclosure rate.

The parents of many of today’s homebuyers needed to make a 20 percent down payment, ‘‘but those days are kind of gone,” he said.

Such a down payment on a $350,000 house would be $70,000, and most people don’t have that much cash, he said.

The result is that more of the purchase price is borrowed, resulting in higher mortgage payments.

Mortgage broker Kip S. Douglass, president of Douglass Mortgage Advisory Group in Upper Marlboro, said he has seen the rise in home loan defaults in Prince George’s County. In a listing he surveys, Douglass said, he noted 16 new notices of default filed on April 17.

That total — about double what he used to see — is no longer atypical, he said.

Some of these borrowers will catch up with payments before losing their home, some will file bankruptcy and others will work out a forebearance agreement with their lenders, Douglass said in an e-mail. Some will also try to sell the property, he said, but perhaps half will lose their home to foreclosure.

Some real estate business has been lost because people who were marginally qualified to buy a home before are no longer approved for loans, said Kevin Cyrus, assistant branch manager of Long and Foster Real Estate Inc. in Mitchellville. As the housing market has cooled, lenders are not as lenient, so buyers need either more money down or more help with closing costs, he said.

Since subprime lenders have suddenly either closed their doors or withdrawn from the subprime market, ‘‘they are no longer standing behind pre-approval letters they have already issued,” Cyrus said. The need for Realtors to scrutinize lender letters has heightened, he said.

Subprime market troubles and disappearing lenders have caused some problems, but nothing ‘‘catastrophic,” said Donald Frederick, president of the Prince George’s County Association of Realtors.

‘‘The biggest problems I’m aware of were delayed settlements, not canceled settlements,” Frederick said. ‘‘There are plenty of programs that replace these types of loans, so I don’t see the problem being as big as some people think it is.”

Banks insured by the Federal Deposit Insurance Corp., such as Bank of America, Sandy Spring Bank and BB&T, don’t dabble much in the subprime market.

Nationally, 23 percent of all subprime loans are made by FDIC-insured banks, said Kathleen Murphy, president and CEO of the Maryland Bankers Association. ‘‘It is a small percentage of the overall subprime lending market,” she said.

With some loan programs ending, and credit guidelines tightening, brokers must really be skilled at finding the right loan, Douglass said.

‘‘What’s happening is, people are starting to need more professional help now,” he said.

(Business Gazette)